Retail Leader of the Year: Joe DePinto of 7-Eleven
Read all about why CSP has chosen DePinto as its 2011 Retail Leader of the Year.
Transforming the Stores
Fiscal strength and culture change are laced through multiple aspects of 7-Eleven’s business, all the way down to what customers see in the store. Part of that transformation had to do with technology and identifying what is moving. Delgado- Jenkins now calls it a “demand chain,” because it’s driven more by what customers want vs. instinct or manufacturer input.
The technology to accomplish this already existed, Rebelez says, but focused efforts, including an ongoing test in Los Angeles, are reaping rewards.
“We organize and rationalize, identify what’s trendy that we’re missing in our stores,” Delgado-Jenkins says, “now that we know what the pull is—what the consumer wants—and what’s the right frequency and right cost for those components.”
Part of 7-Eleven’s vision going forward is fresh foods and proprietary products, Rebelez says. The company’s goal is to match or exceed the quality of a national brand at 20% to 30% better margins. “We’re able to address that across a wide spectrum of products,” he says. “We’ve had great success. And it’s timely in this economic current.” From a marketing perspective, Delgado-Jenkins says one of 7-Eleven’s biggest challenges is luring in new customers. “Customers who come in every day know the breadth of [our] assortment. … I would say they’re very happy with what we’re offering, they’re loyal and keep coming back,” he says. “Something we’re struggling with are customers who don’t know us yet, but when they come in, they say, ‘I didn’t know you have fresh food. You guys have carrots, celery sticks with ranch dressing? Chicken salad? I had no idea.’ ”
To address this, the company introduced a strategy they call “CMR,” or “Concentrated Market Rollout,” in the summer of 2010. Before, the company would reimage stores based on a store-by-store method, Delgado-Jenkins says. Now it takes an entire market and brings all stores up to the same platform, “so that all the stores will have hot foods, all the stores will have the new coffee bar program, all the stores will have been reimaged over the past three years.” Before CMR, there was an obvious problem: Stores had one or more of the updates but not all three. “So,” Delgado-Jenkins says, “you had a mixed bag. If you were to advertise … there is an inconsistent set of platforms in the marketplace.”
The company rolled out CMR in the Northeast and Mid- Atlantic this past February and updated 1,000 stores by June. Conversions were followed with a summertime marketing blitz resulting in strong performance. Delgado-Jenkins says, “We’ve had a tremendous amount of learning, which we’re going to apply in round two.”
And the evolution continues. Delgado-Jenkins says the company has a new project that is going to be “groundbreaking.” It’s a concept “driven by the customer to more closely align the atmosphere they want to shop in with the product assortment we’re offering. We’re going to push the envelope.” While that concept has not been defined, some of the words he uses are “fresh, pleasant, colorful, bistro-like, good value, premium products, innovative products.”
The goal, he says, is to debut the concept in two to three years based on piloting and consumer input. “We want to deny the past,” he says. “We need to find new ways to apply our fundamental principles to give the consumer a newer, more colorful, more exciting experience.”
When one thinks about M&A in the c-store channel, names certain to surface are Couche-Tard and The Pantry. But 7-Eleven?
This year alone, the company has picked up more than 400 sites, with significant acquisitions in New York and Florida. And the growth will continue.
Prior to this spurt, the strategy was to “build 30 to 40 and then close 30 to 40,” says Rebelez. “This was yet another culture change that we had to evolve into.”
Simply put, 7-Eleven is exploiting a recession-focused economy to bolster its ambitious growth strategy. Moored by facile equity, a site-conversion group and a strong commissary and distribution system, 7-Eleven is well positioned to be a major buyer for years to come.
Part of the challenge with quick acquisitions, DePinto acknowledges, is melding cultures. To address that, “we take care of people,” he says. Most of the employees, for example, were retained in the relatively recent ExxonMobil deal in Florida, and 7-Eleven is making concerted efforts to do the same with the Wilson Farms acquisition in Buffalo, N.Y.
Addressing concerns about oversaturation, Rebelez says the company takes great care on that issue, especially in markets with high concentrations of 7-Eleven stores. But he suggests that there is a lot of opportunity in the nation’s urban areas; despite the fact that many of their stores don’t sell gasoline, the profitability of these locations is still above industry averages.
Oddly enough, many of the messages of growth and internal and external transformation came through in that odd marketing move the nation knows as “Undercover Boss.”
DePinto initially said no to the project. “When CBS came to us, at first I said, ‘No way,’ ” he recalls, shaking his head and waving his hand adamantly. “But then I realized, what better way to communicate to our customers that we had great coffee, that we had fresh sandwiches, that we made our own pastries? And then internally, that we cared about our franchisees, that we were here to support them.”
There were risks, of course. The premise was of a corporate executive infiltrating the rank and file to see the reality of what was going on in the field, including his own humanity—spilling coffee and letting a scraggly beard and errant yawn define him to his supervisors. But in the end, DePinto showcases the heart of those who day after day make the pastries, stock shelves and clean aisles.
Undoubtedly, DePinto’s West Point education and military history have something to do with his ability to marshal respect. But most favor his endearing qualities: his desire to listen, respond with intent and, ultimately, make people feel that their voices matter.
He could be your big brother. And not in the paranoid, scifi, always-watching-you sense, or the catty, salacious, reality-TV genre either. But a big brother from the plains of the Midwest. The one who watches out for your silly noggin. The guy who in one breath groans over the last spill you took and, with the other, stands up for you in a fight, a real fight. The one who is Danny and who’s the vigilant goalie guarding his team.
Family, friends and colleagues describe Joe DePinto as a caring, genuine leader, but also someone who is passionate about the success of franchisees in the field.
“Your goalie’s position is like a fireman. You do not need them that often, but when you need them, they better be great. Joe had that kind of personality.” Peter Roche, Junior hockey coach
“He is a very open, very forthright, very genuine person.” Jeff Morris, Alon USA
“Let me tell you—Joe put the fear of God in those plebes, and as soon as he finished with them, he would have a smile upon his face. It was never personal, it was always professional, and it would always end up helping them.” Robert Lott, West Point classmate
“He wasn’t born with a silver spoon. The impact that he’s achieved, everything he accomplished, he accomplished on his own. It’s really the American dream.” George Arvanitis, childhood friend “Joe was determined that he was going to succeed. I see that now. I did notice it back then. He was pretty focused on doing his best.” Ann DePinto, mother
Going Home Again
Back in late July, I racked up a first as a CSP reporter: I spent almost a full workday in the company of the parents of the CEO of the largest convenience-store chain in the world.
John and Ann DePinto were generous enough to open their home in the far north suburbs of Chicago to me. A short line of their oldest son’s friends and family sat in the “hot seat” to be interviewed in preparation for CSP’s Retail Leader of the Year presentation, which took place during the NACS Show.
Initially charmed by the Julius LaRosa song that serves as the couple’s doorbell, I was soon swept into a well-kept, old-world-decorated townhouse with the hearty welcome of an old friend or family member.
Coffee, bagels, doughnuts and more, all were proffered, not unlike one of their son’s 7-Eleven stores. Never did it feel like I was intruding or taking up time this couple couldn’t spare. In fact, by the time Joe DePinto’s brother David, his grade-school friend George and his old hockey coach Pete arrived, I felt I had been absorbed into this group. No, I couldn’t share stories from years and decades gone by, but I could appreciate the amusement, the sincerity and the emotion with which the stories were told.
Some interviews can be clinical and rote; that wasn’t the case here. In sharing stories of Joe’s childhood interests (caring for a robin’s egg until it hatched), competitiveness (yearning to play in a hockey game his coach wanted him to sit out) and self-driven ambition (getting a first job so he could pay for his own hockey gear, despite his parents’ willingness to pick up the cost), I found myself in Anyhome, USA, a place where parents still dote on their now-adult children, revel in those children’s accomplishments and marvel that all their kids “turned out OK.”
Even friend George’s G-rated stories of high-school shenanigans—seriously, this stuff could have been right out of a 1970s sitcom—ingratiated me to this family.
But was Joe DePinto some school-aged genius with a goal to be a heavy hitter in the retailing—or any—industry? No. And his mother makes no apologies about it: “Joe was a perfectly typical kid who did typical-kid things.”
Today, his friends quote 7-Eleven statistics, his brother teases him about spilling coffee on his episode of “Undercover Boss,” and his parents, married 50 years, gaze glowingly at photos of Joe’s family as they marvel at how tall “Little Joey” and Johnny are.
Thousands of stories like Joe DePinto’s have been told, but there’s nothing mundane about it. Every “perfectly typical kid” who finds the right path and achieves greatness should be celebrated. “Never forget where you came from,” his father taught him. For Joe DePinto, that place was—and remains today—a source of great support, respect and love. I only hope that my own family will someday be reflected on in the same way. —Steve Holtz
Though a private company, 7-Eleven has shared certain numbers with the industry. Here are a few:
8,900 Number of stores in North America
43,700 Number of stores worldwide
80% U.S. franchise percentage, with 100% the goal for 2013
$63 billion Annual sales worldwide
20% Growth in store base (2006-2010)
14 years Continuous positive same-store merchandise sales growth
Can 7-Eleven Get Any Bigger?
The answer is yes, according to Chris Tanco, senior vice president of 7-Eleven’s international business. Just “optimizing the growth potential” in the 16 countries where the chain already has stores is a daunting task.
For instance, he says, there are 230 million people in Indonesia—a politically stable country—and more than 50% of the population is under 21. “It’s right in our bailiwick,” Tanco says. “We ought to have 4,000 or 5,000 stores in Indonesia.” He refers to 7-Eleven’s success in Thailand, where there are a mere 60 million people. 7-Eleven has 6,000 stores there and is growing by 550 a year.
Now at 43,700 stores worldwide, 7-Eleven intends to grow stores “significantly” by 2020.